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USD/CNH recently tested the 200-day moving average at 7.22, resulting in a brief rebound. The next objectives could be at 7.17 and 7.16.
The pair has crossed a descending trend line since January, indicating a potential for further bounce. A recent pivot high of 7.31 presents a short-term obstacle, and if this level is not surpassed, a correction phase may occur.
Testing Support Levels
If the currency pair cannot maintain 7.22, a deeper pullback may ensue. The projections for the next objectives remain at 7.17 and 7.16.
So far, the currency pair has shown a reaction right around the 200-day moving average, bouncing briefly off the 7.22 mark. This technical level tends to be watched closely, and a hold above it would usually support a continued climb. However, the fact that the rebound was short-lived suggests an inclination towards weakness, or at least hesitation.
The breach of the descending trend line going back to January is worth underscoring—it often signals a change in direction or momentum. Still, this isn’t normally enough on its own. Price action now needs to confirm that shift through a sustained move, preferably with a series of higher highs and higher lows. The 7.31 level—cited as a recent high—is the line in the sand for that scenario. If the pair struggles to move convincingly above it and instead keeps turning lower, it would strongly suggest that buyers are short on conviction.
Failure to stay above 7.22 would point to the rebound being more of a temporary pause than a proper recovery. Should that support level give way, measured targets sit at 7.17 and 7.16, where prior demand clusters may reappear. These are not plucked arbitrarily—they align with both horizontal structure and prior consolidation.
Market Sentiment And Risk Assessment
In our view, the recent price behaviour should be interpreted within that framework. We aren’t looking at a broad-based directional trend yet. Momentum, at least in the short term, appears patchy. When prices push toward a key level and promptly retreat, it often hints at positioning being one-sided, or simply that no fresh capital is stepping in to support acceleration.
Options pricing has not yet shown sharp skew changes, yet premium patterns suggest a tilt to downside protection becoming incrementally more attractive. That could be defensive hedging rather than speculative bets, but either way, it’s something to monitor. Skews across tenors closer to expiry would give clearer direction.
For now, attention should be paid to how the pair reacts to repeated tests of those lower zones. If buyers don’t emerge meaningfully at or around 7.17, it increases the odds of the 7.16 level being revisited quickly. From a risk perspective, using implied volatility to time entry and exit may prove more effective than relying heavily on directional conviction. Especially with economic data from both economies due soon, we could see the range broaden but without a decided trend emerging at once.
Technicals alone aren’t the whole picture here, but viewed through that lens, current behaviour reflects hesitance rather than strength. Adjusting spread exposure ahead of repeated tests of support zones could reduce whipsaw risk. We’ve found that lower delta strategies with slight gamma exposure tend to hold better when price oscillates within clearly identified levels, which seems highly probable in the days ahead.
The position around the 200-day line remains delicate. So long as that remains in play, there’s scope for alternating episodes of strength and breakdown—each short-lived, but tradable. Accordingly, deploying tighter stops or reducing gearing might be prudent. We’ve seen that repeated tests of major averages without breakout follow-through usually don’t bode well for near-term directional calls. A false break is more damaging than standing aside. Better patient than reactive.
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